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Egypt tourism dips amid war, but markets resiliant

CAIRO: Quiet pervades normally bustling Cairo hotel lobbies as police outside, wary of a possible backlash attack during the US-led war against Iraq, slam hefty fines on any unauthorised taxis hovering nearby.

Officials in the tourism industry, a key source of much-needed hard currency, report massive cancellations since the war in Iraq started, with many hotels more than half empty as visitors stay away from countries in a region now perceived as high-risk.

The US-led war on Iraq could cost Egypt between $4 billion and $8 billion, depending on how the conflict progresses, as key sectors like tourism -- a roughly four billion dollars a year industry -- slump, government officials say.

Tourism Minister Mamdouh el-Beltagi told Reuters last month a war in Iraq could cost Egypt's tourism industry alone two billion dollars if it continued for a relatively long period.

Meanwhile, foreign investment is on hold, trade is disrupted in the Gulf region due to the war, or reduced because of higher shipping insurance premiums, and remittances from Egyptian expatriates are dwindling as many workers in the Gulf have already opted to return home during the conflict, analysts say.

But so far the Egyptian pound and Egyptian stocks have appeared quite resistant to the impact of war, with the benchmark Hermes share index up 10.2 percent since March 19, as traders bet on a post-war recovery in a bourse already long depressed by regional and economic woes.

Ashraf el-Siessy, Assistant Food and Beverage Manager at Cairo's Gezira Sheraton Hotel told Reuters occupancy at that hotel had slumped after the outbreak of war.

"Business has taken a downturn in food and beverage of course and in occupancy. At the moment we are running at 40 percent," he said. "Right before the war started it was 65 to 70 percent," he said, adding that no fresh bookings were being made by large tour groups.

"We are definitely seeing more cancellations than reservations," he said. "It affects the whole of the hotel, not just the rooms, it flows onto the food and beverages," he said.

HOLIDAYS TO EGYPT CANCELLED

"People are cancelling their holidays to Egypt. We still have groups coming, but in much smaller numbers," said the manager of a major Western tour operator in Cairo.

But, like many analysts, she was upbeat on the chances of tourism rebounding fast after the conflict, especially if the scope of the war did not widen. "For Egypt, I think the slowdown in tourism will just last for the duration of the conflict. People tend to come back here very quickly," she said.

Visitors returned very soon after the last Gulf War because they viewed it as a reasonably safe destination, she said.

Siessy said prices were now stable after some recent increases to reflect higher raw material costs after the pound fell against the dollar following its January flotation.

But so far dollar-pound rates have been fairly steady since war started thanks to the prospect of a multi-billion dollar aid package -- $2.3 billion extra expected from the United States alone -- and government moves to protect the pound, such as last week's decree ordering companies earning foreign exchange to sell 75 percent of that income to the banking sector.-Reuters